IDEAS home Printed from https://ideas.repec.org/a/eee/soceps/v91y2024ics0038012123002914.html
   My bibliography  Save this article

Measuring participation in undeclared work in Europe using survey data: A method for resolving social desirability bias

Author

Listed:
  • Arezzo, Maria Felice
  • Horodnic, Ioana A.
  • Williams, Colin C.
  • Guagnano, Giuseppina

Abstract

Measuring participation in undeclared work using surveys has been criticized for under-estimating the level of engagement due to social desirability bias that leads to an under-reporting of “bad” behavior. Until now, few studies have sought to quantify the amplitude of this bias in surveys of undeclared work. The aim of this paper is to fill this gap by using the most appropriate methodologies for estimating the probability of misleading responses in such surveys. Reporting data from special Eurobarometer survey no. 498 conducted in 2019 and involving 27,565 respondents in EU-27 countries and the UK, only 3.5% openly admitted to participating in undeclared work. The results of a Probit model with correction for misclassified cases (i.e., those undertaking undeclared work but declaring that they do not) reveals that nearly a quarter (23.3%) of the respondents undertaking undeclared work refused to openly admit this during the survey, due to the social desirability bias. The estimated overall proportion of undeclared workers is 17.3%. We obtained this value by correcting for both misclassification and the additional source of negative bias due to the large imbalance in the data (i.e., observations in one class are much lower than the other). The outcome of this new advanced approach in analysing undeclared work is that survey estimates can now report its size and determinants in a more accurate manner than has been previously the case.

Suggested Citation

  • Arezzo, Maria Felice & Horodnic, Ioana A. & Williams, Colin C. & Guagnano, Giuseppina, 2024. "Measuring participation in undeclared work in Europe using survey data: A method for resolving social desirability bias," Socio-Economic Planning Sciences, Elsevier, vol. 91(C).
    • Handle: RePEc:eee:soceps:v:91:y:2024:i:c:s0038012123002914
    DOI: 10.1016/j.seps.2023.101779
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0038012123002914
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.seps.2023.101779?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Lars P. Feld & Bruno S. Frey, 2002. "Trust breeds trust: How taxpayers are treated," Economics of Governance, Springer, vol. 3(2), pages 87-99, July.
    2. Friedrich Schneider, 2021. "Do Different Estimation Methods Lead to Implausible Differences in the Size of the Non-Observed or Shadow Economies? A Preliminary Answer," CESifo Working Paper Series 9434, CESifo.
    3. Leandro Medina & Mr. Friedrich Schneider, 2018. "Shadow Economies Around the World: What Did We Learn Over the Last 20 Years?," IMF Working Papers 2018/017, International Monetary Fund.
    4. Michael Hallsworth, 2014. "The use of field experiments to increase tax compliance," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 30(4), pages 658-679.
    5. Slemrod, Joel & Blumenthal, Marsha & Christian, Charles, 2001. "Taxpayer response to an increased probability of audit: evidence from a controlled experiment in Minnesota," Journal of Public Economics, Elsevier, vol. 79(3), pages 455-483, March.
    6. Annabelle Doerr & Sarah Necker, 2021. "Collaborative Tax Evasion in the Provision of Services to Consumers: A Field Experiment," American Economic Journal: Economic Policy, American Economic Association, vol. 13(4), pages 185-216, November.
    7. Hausman, J. A. & Abrevaya, Jason & Scott-Morton, F. M., 1998. "Misclassification of the dependent variable in a discrete-response setting," Journal of Econometrics, Elsevier, vol. 87(2), pages 239-269, September.
    8. Colin C. Williams & Ioana A. Horodnic, 2017. "Evaluating the Illegal Employer Practice of Under-Reporting Employees’ Salaries," British Journal of Industrial Relations, London School of Economics, vol. 55(1), pages 83-111, March.
    9. King, Gary & Zeng, Langche, 2001. "Logistic Regression in Rare Events Data," Political Analysis, Cambridge University Press, vol. 9(2), pages 137-163, January.
    10. Burgstaller, Lilith & Pfeil, Katharina, 2022. "You don't need an invoice, do you? An online experiment on collaborative tax evasion," Freiburg Discussion Papers on Constitutional Economics 22/6, Walter Eucken Institut e.V..
    11. Péter Elek & János Köllő, 2019. "Eliciting permanent and transitory undeclared work from matched administrative and survey data," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 46(3), pages 547-576, August.
    12. repec:adr:anecst:y:1999:i:55-56:p:09 is not listed on IDEAS
    13. Fochmann, Martin & Fochmann, Nadja & Kocher, Martin G. & Müller, Nadja, 2021. "Dishonesty and risk-taking: Compliance decisions of individuals and groups," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 250-286.
    14. Burgstaller, Lilith & Feld, Lars P. & Pfeil, Katharina, 2022. "Working in the shadow: Survey techniques for measuring and explaining undeclared work," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 661-671.
    15. Doerr, Annabelle & Hartmann, Carina & Sajons, Christoph, 2022. "Unregistered work among refugees: Evidence from a list experiment in Germany," Working papers 2022/01, Faculty of Business and Economics - University of Basel.
    16. Dominik H. Enste & Friedrich Schneider, 2000. "Shadow Economies: Size, Causes, and Consequences," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 77-114, March.
    17. Poterba, James M & Summers, Lawrence H, 1995. "Unemployment Benefits and Labor Market Transitions: A Multinomial Logit Model with Errors in Classification," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 207-216, May.
    18. Arne Jon Isachsen & Steiner Strøm, 1985. "The Size And Growth Of The Hidden Economy In Norway," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 31(1), pages 21-38, March.
    19. Jason Abrevaya & Jerry A. Hausman, 1999. "Semiparametric Estimation with Mismeasured Dependent Variables: An Application to Duration Models for Unemployment Spells," Annals of Economics and Statistics, GENES, issue 55-56, pages 243-275.
    20. Putniņš, Tālis J. & Sauka, Arnis, 2015. "Measuring the shadow economy using company managers," Journal of Comparative Economics, Elsevier, vol. 43(2), pages 471-490.
    21. Friedrich Schneider & Dominik Enste, 1999. "Shadow Economies Around the World - Size, Causes, and Consequences," CESifo Working Paper Series 196, CESifo.
    22. Lars P. Feld & Claus Larsen, 2012. "Undeclared Work, Deterrence and Social Norms," Springer Books, Springer, edition 127, number 978-3-540-87401-0, October.
    23. Olumide TAIWO, 2013. "Employment choice and mobility in multi-sector labour markets: Theoretical model and evidence from Ghana," International Labour Review, International Labour Organization, vol. 152(3-4), pages 469-492, December.
    24. Kaufmann, Daniel & Kaliberda, Aleksander, 1996. "Integrating the unofficial economy into the dynamics of post-socialist economies : a framework of analysis and evidence," Policy Research Working Paper Series 1691, The World Bank.
    25. Bjørneby, Marie & Alstadsæter, Annette & Telle, Kjetil, 2021. "Limits to third-party reporting: Evidence from a randomized field experiment in Norway," Journal of Public Economics, Elsevier, vol. 203(C).
    26. Ahumada, Hildegart & Alvaredo, Facundo & Canavese, Alfredo, 2008. "The monetary method to measure the shadow economy: The forgotten problem of the initial conditions," Economics Letters, Elsevier, vol. 101(2), pages 97-99, November.
    27. Colin C Williams, 2014. "Out of the shadows: a classification of economies by the size and character of their informal sector," Work, Employment & Society, British Sociological Association, vol. 28(5), pages 735-753, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Burgstaller, Lilith & Feld, Lars P. & Pfeil, Katharina, 2022. "Working in the shadow: Survey techniques for measuring and explaining undeclared work," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 661-671.
    2. Colin C. Williams & Friedrich Schneider, 2016. "Measuring the Global Shadow Economy," Books, Edward Elgar Publishing, number 16551, December.
    3. Oksana Nezhyvenko, 2018. "Informal Employment in Ukraine and European Union Transition Countries," Erudite Ph.D Dissertations, Erudite, number ph18-03 edited by Philippe Adair, February.
    4. Colin C. Williams, 2014. "Confronting the Shadow Economy," Books, Edward Elgar Publishing, number 15370, December.
    5. Emmanuel Umoru Haruna & Usman Alhassan, 2022. "Does digitalization limit the proliferation of the shadow economy in African countries? An in‐depth panel analysis," African Development Review, African Development Bank, vol. 34(S1), pages 34-62, July.
    6. Omodero Cordelia Onyinyechi, 2019. "The Financial and Economic Implications of Underground Economy: The Nigerian Perspective," Academic Journal of Interdisciplinary Studies, Sciendo, vol. 8(2), pages 155-167, July.
    7. Schneider Friedrich & Buehn Andreas, 2017. "Shadow Economy: Estimation Methods, Problems, Results and Open questions," Open Economics, De Gruyter, vol. 1(1), pages 1-29, March.
    8. Kose, M. Ayhan & Elgin, Ceyhun & Ohnsorge, Franziska & Yu, Shu, 2021. "Understanding Informality," CEPR Discussion Papers 16497, C.E.P.R. Discussion Papers.
    9. Ioana Alexandra Horodnic & Colin C. Williams & Oana Țugulea & Iuliana Claudia Stoian Bobâlcă, 2022. "Exploring the Demand-Side of the Informal Economy during the COVID-19 Restrictions: Lessons from Iași, Romania," Sustainability, MDPI, vol. 14(12), pages 1-16, June.
    10. Dagmara Nikulin & Ewa Lechman, 2021. "Shadow Economy in Poland: Results of the Survey," SpringerBriefs in Economics, in: Shadow Economy in Poland, chapter 0, pages 49-65, Springer.
    11. Putniņš, Tālis J. & Sauka, Arnis, 2015. "Measuring the shadow economy using company managers," Journal of Comparative Economics, Elsevier, vol. 43(2), pages 471-490.
    12. Arzhenovskiy, Sergey, 2023. "Estimate of shadow economy dynamics in Russia and regions: The inflationary aspect," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 69, pages 121-140.
    13. Ceyhun Elgin & M. ayhan Köse & Franziska Ohnsorge & Shu Yu, 2021. "Understanding Informality Abstract:," Working Papers 2021/03, Bogazici University, Department of Economics.
    14. Torgler, Benno & Schneider, Friedrich & Schaltegger, Christoph A., 2007. "With or Against the People? The Impact of a Bottom-Up Approach on Tax Morale and the Shadow Economy," Berkeley Olin Program in Law & Economics, Working Paper Series qt6331x6vz, Berkeley Olin Program in Law & Economics.
    15. Friedrich Schneider & Robert Klinglmair, 2004. "Shadow economies around the world: what do we know?," Economics working papers 2004-03, Department of Economics, Johannes Kepler University Linz, Austria.
    16. Friedrich Schneider & Andreas Buehn & Claudio E. Montenegro, 2011. "Shadow Economies All Over the World: New Estimates for 162 Countries from 1999 to 2007," Chapters, in: Friedrich Schneider (ed.), Handbook on the Shadow Economy, chapter 1, Edward Elgar Publishing.
    17. Martin Abraham & Kerstin Lorek & Friedemann Richter & Matthias Wrede, 2017. "Collusive tax evasion and social norms," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 24(2), pages 179-197, April.
    18. Massomeh Hajilee & Farhang Niroomand & Linda A. Hayes, 2023. "The relationship between interest rate volatility and the shadow economy in OECD countries: An asymmetric analysis," Australian Economic Papers, Wiley Blackwell, vol. 62(3), pages 539-566, September.
    19. Nezhyvenko, O., 2019. "Indirect or Macroeconomic Methods in Measuring the Informal Economy," Journal of Applied Management and Investments, Department of Business Administration and Corporate Security, International Humanitarian University, vol. 8(4), pages 201-215, December.
    20. Monica Violeta Achim & Sorin Nicolae Borlea & Lucian Vasile Găban & Alin Adrian Mihăilă, 2019. "The Shadow Economy and Culture: Evidence in European Countries," Eastern European Economics, Taylor & Francis Journals, vol. 57(5), pages 352-374, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:soceps:v:91:y:2024:i:c:s0038012123002914. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/seps .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.